“Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones ... All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind.”

— Karl Marx, The Communist Manifesto

Up until this current crisis manifested itself, it was true to characterize a distinguishing feature of capitalism as the “Constant revolutionizing of production”, that is to say, the destruction and recreation of the means of production, new products created and new or existing markets exploited anew.
However, in a world where there is now global over-production and increasingly impoverished working classes unable to afford the products of their own labours, is it possible that this distinguishing feature has reached a dead-end? And if so, what are the implications? Will general war, as it has in the past, be the only ‘solution’ to this, the greatest crisis of the over-accumulation of capital in history?

Or has the capitalist system finally ran out of road? And if so, are we in a position to replace it with something else?

Millions of people, and not just US citizens supported the election of Barack Obama hoping against hope that he really did represent real change in what was probably the biggest confidence trick carried out on a population, ever. No doubt, risky as it was given the insidious and poisonous role of racism in US life, putting Barack Obama forward as the Democratic Party’s candidate was a stroke of pure genius on the part of his ‘handlers’ (as long he can find his birth certificate).[1]

But it didn’t take too long to burst an awful lot of bubbles as the outpouring of articles, well finally from the left anyway, attests to. But what can we learn from this historic, and no doubt history will bear me out on this, infamous deception.

Yet paradoxically, the election of Barack Obama does represent a change, not to US policies mark you, that was never an issue, but nevertheless a psychological defeat of a sort, for what I choose to describe as the exposure of the ‘tired old white men syndrome’. This probably needs some explaining and as I’m thinking on my feet so-to-speak, we have to look further afield than the election, or indeed any election, in fact we have to examine the nature of capitalist ‘democracy’ itself if we are to make any sense of the events of this past year.

First of all, selecting Barack Obama is a reflection of capitalism’s almost total loss of legitimacy and thus it was forced to implement a radical marketing and ‘rebranding’ campaign in order to retain an increasingly alienated and cynical population if the ‘Project for the New American Century’ was to even stand a chance of staying on track.

“The second thing that might immediately spring up in your mind is that the pre-election PR show code-named ‘Barack Obama’ staged by the Democratic party, is over now given how good Barack was playing his part of a cover of a second arrival to power of the old team of Democrats that ruled America in 1992-2000.
The confirmation of this appointment [of Hillary Clinton] is the best indication of the degree of freedom Barack Obama might enjoy as both a politician and president. This degree is nil (at least at present).

Yes indeed, however the collapse of ‘finance capitalism’ has thrown a spanner in the works, in fact it threatens to undermine the entire ‘Project Obama’ given that under the cover of president elect Obama, it is already clear that an identical trajectory is to be pursued by the incoming presidential team, replete with the same suspects who were the architects of the current crisis in the first place.
And herein lies the danger, the real danger of the US ruling class pursuing an even more dangerous and adventurist line if it is to try and maintain its position of ‘world policeman’ and the world’s leading economy.

But it’s worth noting here that Obama’s ‘New, New Deal’ is taking place in a very different world than the one that gave rise to Roosevelt’s rescue of capitalism in the 1930s (that in any case took around six years to have any effect on the economy and in reality it was the outbreak of war that saved US capitalism's bacon).

The causes of the current crash may be similar to those that precipitated the Crash of ‘29 but the economic context is entirely different. The US economy is no longer the world’s factory having in the first place, exported most of its domestic production to the cheap labour markets of the world and secondly, what was the main engine of domestic production, the auto industry is outdated and unable to compete in the global market with the ‘upstarts’ (and in any case, the global market is already saturated with unsaleable products, which in turn is a major cause of the current crisis, namely over-production). The US auto industry’s products are inferior, gas-guzzling dinosaurs that even the domestic market is rejecting in favour of superior, efficient and infinitely more technologically advanced competitors from Asia and even Europe.

Is it realistic therefore to envisage a re-capitalization/recreation of the US manufacturing economy? Where will the capital come from, especially given the (former) centrality of the financial sector and the vast sums of public money ($8.5 trillion-plus) being used to bailout the financial sector, money that could have been better used to finance the ‘New, New Deal’? With the banks effectively nationalized and with the state as guarantor, they could have continued to function. The only losers would be the investors to which I say, 'well screw you! You took your chances and lost, isn't that what the 'market' is all about?'

Team Obama are talking of investing billions in infrastructure renewal, roads, bridges, schools and so forth and whilst this might, in the short term, ameliorate a small percentage of the growing unemployment, currently running at (officially) nearly 7% of the workforce and likely to triple over the next twelve months, it doesn’t address the fundamental contradictions of an economy which on the one hand is pouring trillions into the military complex, all of it socially useless, and on the other is reliant on the tribute extracted from the rest of the world’s economies’ reliance on the dollar as the medium of exchange, the so-called fiat dollar.

And given precipitous fall in the price of oil (now running at around $40 a barrel), the tribute is likely slow to a trickle as the world’s economy grinds to a halt.

It’s important to understand here that the $8.5 trillion ‘bailout’ of the major US financial institutions is in actuality the destruction of over-valued assets. Over-valued because this wealth was ‘created’ through financial speculation in invented ‘assets’, derivatives, futures and hedge funds. When these were finally revealed as being worthless, the wheels came off and the entire scam collapsed.

"So Goldman Sachs votes for socialist, state-directed lending [through the creation of a state bank]. The symbolic power of this thought is mind-numbing, for those of us who immersed ourselves in the liberalised, winner-takes-all financial markets of the past 25 years." — 'How much will taxpayers finance economy?' Robert Peston, BBC News

Poor old Peston, his illusions shattered as his much-vaunted 'free market' bites the dust. The BBC by the way, through its so-called expert commentators, still insists on separating the collapse of the financial services sector from the recession (see 'A capital problem' by Paul Mason, BBC Newsnight 5 November, 2008).
No real wealth was created, it existed only on spreadsheets. All well and good for those corporations that made the profits and then walked away from the disaster they had created, but they left behind a real debt in the sense that the self-same financial institutions ultimately rely on the real economy to survive after the ‘assets’ they invested our money in vaporized.

And because the financial sector is driven by the need to make a profit, under the current circumstances, they see no profit to be made from lending it, either to each other or to the public and thus the 'market' freezes up solid.

Making money cheaper by lowering the interest rate doesn't help either as the principal source of profit for the banks is the interest charged on loans (hence the ongoing ‘struggle’ here in the UK between the government and the banks over passing on the lower interest rate to their customers).

Past crises of the over-accumulation of capital have relied ultimately on the re-accumulation of capital through its wholesale physical destruction first and then its recreation, ie war and the subsequent reconstruction such as took place after WWII. However, how can you destroy something that didn’t exist in the first place, except on paper?

This time around there can be no recreation of a consumer economy such that which took place after WWII (with much of the war economy converted to civilian production, for example, military aircraft production converted into civilian air transport and hence the birth of the modern tourist industry). For a start, the productive capacity no longer exists in the US, it’s mostly been exported and secondly, the US has lost its place as the world’s number one producer of consumer products (the US service sector makes up about 80% of US economic activity). Only in the sphere of military production does the US still reign supreme. And there is an irony here, for the intellectual capital invested in high-tech military products was diverted from the civilian sector thus leading to the US economy’s inability to compete in an increasingly crowded and sophisticated global market for consumer products.

It’s difficult to see exactly what the incoming Obama administration can actually do about this crisis except attempt to ride it out and let the people pay the cost, which in any case, they are already doing. However, given the enormous ‘goodwill’ he has accumulated through his promises of change, unless he can actually deliver, ‘goodwill’ can just as easily vaporize as quickly as it was engineered in the first place. Under such circumstances it is more than likely the ruling elite will use Obama as a ‘sacrificial lamb’ who has been led to the (economic) slaughter.

Not that this will solve the crisis, removing Obama may serve a public relations role but would not bring a resolution of the crisis. Increasingly, it looks like history repeating itself as tragedy as the state, the instrument of last resort for the likes of Robert Peston et al, is forced to step in.

But this is a far cry from socialism, it is as it was in the past, the state’s, eg yours and my money, rescuing capitalism from itself but this time without getting any of the benefits. No universal health care, no public housing and so forth.

It is within this context that the issue of democracy comes to the fore. If it’s our money, our banks that are being used then if we lived in a real democracy, we would be able to decide how best to use our assets to solve the crisis. For example, socially directed investment that benefits the great majority of the people and given the environmental crisis that confronts us, that requires us to completely retool our infrastructure, and what better way than taking the vast assets that the state commands to do just this?

Note

1. ‘COULD OUR SUPREME COURT NULLIFY THE ELECTION?’
“Everyone by now knows the acronym, POTUS, standing for President of the United States. Well there is also SCOTUS for Supreme Court of the United States. It sounds like a body part, but now there is fear that the election of '08, like the election of '04, may be going before the jurists. Could they do to Obama what they did to Gore? Could he be disqualified this late in the game?

“With Clarence Thomas, of course, leading the way, the Supremes may be hearing the issue about whether or not Barack Obama has a birth certificate and is, hence, able to become president. OMG, does that mean the possibility of more political instability to add to the economic instability?” — Mark Crispin Miller, Democratic Underground.